Britain’s banks were last night under mounting pressure to refund millions of
customers who were missold payment protection insurance as analysts
calculated that the final bill could reach £8 billion.

The clamour for the banks to back down intensified after Lloyds Banking Group,
which had 40 per cent of the PPI market, shocked the City by revealing that
it had set aside £3.2 billion to compensate customers who were wrongly sold
the policies.

The provision was more than double analysts’ estimates and pushed Lloyds £3.5
billion into the red in the first three months of the year.